The resilience of the Malaysian economy is the biggest worry of almost every Malaysian today. Can Malaysia ride out the global economic crisis even though half the world is already in recession?

Comments have been made that the Malaysian economy will not slide into a recession. Malaysia's international reserves are high. As of end September 2008, Malaysia's international reserves stood at US$107.6 billion.

Nevertheless, as far as Malaysia is concerned, what we are facing are the effects of a global meltdown which will impact our economy adversely.

The buffet of worse-than-expected trade numbers from Malaysia's main trading partners as well as slumping industrial production and export figures indicate that Abdullah Ahmad Badawi's administration will have little choice but to hope for growth to be between one and two percent.

The pandemic nature of the economic crisis gripping the world means there is no safe harbour, and Malaysians should prepare themselves for tougher times in 2009, as expressed by Manu Baskaran, an economist and CEO of Centennial Asia Advisory.

With Malaysia's high exposure to the world economy, there is no escape from the downturn. The government's high-level Economic Council, during a meeting last Tuesday, was told that risks to the country had increased substantially in the past month as a result of a sharp dive of the US economy and other major economies.

Also, government officials conceded that the economies of China and India, despite their growth forecast this year, will not be able to provide the markets needed for Malaysian exports as both have recorded worse than expected industrial output figures.

While a persistent trade surplus can be interpreted as a sign of export competitiveness due to rising productivity or falling costs, it is more than likely that an undervalued ringgit is the reason in Malaysia's case, and which obviously cannot go on forever.

Furthermore I believe that Malaysia's RM7 billion stimulus package is so limited in the face of what has happening that it has slowed down lending activities within the country.

"That (package) will save us. That will prevent us from facing the threats that may come. It will also help us to continue with economic activities," Abdullah had said, adding that the basic economy must be improved while the real economy must not be affected.

But the question is: is RM7 billion is enough to cater for 2009? The government shall need to reconsider seriously a second stimulus package. Also, the government shall need to be very strict in terms of setting a ceiling. Government expenditure needs to be rearranged or projects reprioritised so they operate within the ceiling.

There is no guarantee that the inflation rate will fall in equal proportion with falling oil prices. Besides, there is always a lag time for these price adjustments to take effect.

In short, these adjustments are neither proportionate nor instantaneous. In Malaysia, stabilisation of food prices is achieved via subsidies, control of prices and control of supply. Subsidies are meant to help the poor and to stabilise prices from price shocks.

In addition, subsidising the production of certain goods, help promote domestic industries. Unfortunately, the upswing in global food and commodity prices can place heavy toll on the nation's finances.

Many believe that subsidies do more harm than good because they act against the functioning of an efficient market. Subsidies raise the important issue of inequity and regression. It is the tax-paying citizens who have to ultimately foot the bill.

The question is: are we able to practice today the same methods we used in 1997 to tackle the then financial crisis? Are we able to ramp up our manufacturing sector and push our exports to the US, Europe and China?

Are we as confident of our private sector? Malaysia's economic stability is also supported by the high banking liquidity and private sector confidence but if private sector confidence slumps, the government would need to inject more funds into the market.

The two crucial elements in tackling the effects of the economic turmoil, the credit level and job opportunities need to be highly prioritised.